Are You VMworn Out?
May 2, 2024
By Charlie Shen, Principal Solution Architect, Microsoft Platforms, Amazon Web Services (AWS) and Jeff Carson, Vice President of Strategy and Solutions, ClearScale
Navigating the Uncertainty of VMware’s Acquisition by Broadcom
In the wake of Broadcom’s acquisition of VMware in November 2023, the cloud computing and virtualization landscape is facing a sea of changes. As organizations grapple with the implications of this major industry shakeup, many VMware customers are finding themselves in a state of uncertainty. This pivotal moment presents an opportunity to reassess your digital infrastructure strategy. Some changes of note as of the date of this writing:
- End of perpetual license structure and add-on services
- Reorganization of Specialist counterparts at VMware to general Core Sales Teams
- Partner Program changes – Termination of VMware Partner Connect Program
- VMC Release notes indicate VMware cloud services entering read-only maintenance mode
Key Customer Challenges
These changes and their pace of rollout have created a trust deficit in the VMware solution set in the market. They placed customers under pressure to make quick decisions about renewals with little advance notice. Some of these decisions we are seeing in the market come with a 3-11x price increase in addition to the short decision time. This has left customers concerned with the next steps and urgently evaluating the options and alternatives that are available to them.
As VMware customers face these profound changes, the question isn’t just about adapting. It’s about thriving in a rapidly evolving digital landscape. With AWS and ClearScale, you’re not just keeping up; you’re setting the pace. As an AWS Premier Tier Services Partner, ClearScale is here to guide you through the fog of doubt and uncertainty, showing you a clearer, more reliable path with AWS cloud-native solutions.
1. Shifting Strategic Priorities
The Broadcom Effect
Broadcom’s acquisition of VMware is not just a change in ownership; it’s a shift in strategic direction. Historically, Broadcom’s acquisitions have often led to a prioritization of financial performance over product innovation. For example, after acquiring CA Technologies and Symantec’s enterprise business, Broadcom was noted to focus on cost-cutting and efficiency measures. These actions are often interpreted as prioritizing financial performance.
Moreover, the investment community and market analysts frequently scrutinize such acquisitions to assess impacts on innovation cycles, particularly in fast-evolving tech sectors. This business model could potentially lead to reduced investments in R&D and customer service in the VMware ecosystem. For businesses reliant on cutting-edge technology and support, this may signal a time to consider a more innovation-focused platform like AWS, which continuously evolves and expands its services to meet future demands.
2. Integration and Compatibility Concerns
Uncertain Roadmap
Broadcom’s history of streamlining operations to enhance profitability often involves significant changes in product and service roadmaps. This could lead to compatibility issues with existing IT infrastructures and third-party applications, creating a complex environment for IT teams to navigate. The integration of VMware’s extensive portfolio with Broadcom’s existing products may also result in the discontinuation of certain features or services that businesses depend on today.
“This all sounds very much like Broadcom taking an aggressive approach to its route to market and focusing on those partners that can deliver growth and significant revenue,” said Omdia chief analyst Roy Illsley. This was in response to Broadcom’s announcement that the ability to transact as a VMware Cloud Services Provider, under the VMware Partner Connect Program, will come to an end. What else is coming down the pipe? Transitioning to AWS offers a stable, expansive suite of compatible services and tools, ensuring seamless integration with your existing and future business applications.
3. Cultural and Operational Shifts: Managing New Dynamics
Acquisitions, such as Broadcom’s takeover of VMware, often precipitate profound cultural and operational changes that can ripple across the newly formed entity. These shifts are not just about merging systems or policies, but also about reconciling different corporate cultures, which can significantly impact employee morale and operational efficiency.
Impact on Employee Morale and Operational Efficiency
When Broadcom integrated VMware, it initiated a layoff of more than 1,200 employees. Such substantial layoffs can lead to a decrease in morale among remaining staff, who may feel insecure about their future roles. This insecurity can reduce productivity and focus, critical elements in innovative and customer-focused industries. Moreover, the loss of experienced employees, who have deep institutional knowledge and customer relationships, can disrupt workflows and the internal dynamics that drive product development and customer service excellence.
Cultural Mismatch and Its Repercussions
The integration of a large-scale, innovative company like VMware into a conglomerate like Broadcom, which has a distinctively different operational ethos focused more on profitability and cost-efficiency, can create a stark cultural mismatch. This divergence can affect how decisions are made, how teams are managed, and even how products are developed and supported. Such a cultural clash might slow down decision-making processes or lead to a less collaborative working environment, ultimately impacting product quality and innovation—areas where VMware previously excelled.
Why AWS Stands Out as an Alternative
In contrast to the turbulence typically associated with such acquisitions, AWS has maintained a consistent track record of customer-centricity and operational excellence. Known for its robust support systems and a strong emphasis on customer service, AWS provides a stable and secure environment that businesses can rely on. This is not self-proclaimed marketing on AWS’s part. Gartner has named AWS a leader in the Magic Quadrant for Strategic Cloud Platform Services for the thirteenth year in a row.
The AWS culture is deeply rooted in innovation and customer alignment, which ensures that services not only meet but often exceed customer expectations. AWS has the most extensive global infrastructure and unmatched experience, maturity, reliability, security, and performance. It also offers the most comprehensive compliance controls with the 143 security standards and certifications it currently supports. AWS has been expanding its services to support any cloud workload and has 200+ services for compute, storage, databases, networking, analytics, GenAI, IoT, and other services. Its continual investments in expanding its service offerings and enhancing existing solutions, make AWS a particularly attractive option for organizations seeking a reliable cloud provider they can trust amidst the uncertainties brought by VMware’s integration into Broadcom.
These reasons highlight why businesses affected by the VMware-Broadcom acquisition might consider transitioning to AWS, where the focus on customer satisfaction, innovative solutions, and a stable operational model offer a reassuring contrast to the potential disruptions they currently face.
4. Pricing and Licensing Models
Cost Uncertainty via Licensing Model Transformation
In the aftermath of Broadcom’s acquisition of VMware, significant changes to VMware’s licensing models have been announced, marking a shift away from perpetual licensing towards subscription-based models. This transition represents a substantial modification in how customers can access and pay for VMware products. Under the new subscription model, customers will no longer own the licenses indefinitely but will need to pay recurring fees to maintain access to the software.
This change can lead to increased long-term costs, especially for businesses accustomed to the one-time purchase price of perpetual licenses. The move away from perpetual licenses might also affect how businesses manage software assets and compliance, adding layers of complexity to VMware’s product management.
In contrast, AWS offers a transparent and flexible pricing model that allows businesses to pay only for the services they use without the constraints of long-term commitments or complex licensing agreements. AWS’s pricing models allow customers to reduce costs by offering a pay-as-you-go approach for pricing for the vast majority of cloud services, offering scalable solutions that can grow with your company. This approach not only simplifies budgeting but also enhances operational flexibility. This makes AWS a viable and attractive alternative for organizations looking to mitigate the new financial uncertainties introduced by VMware’s licensing changes.
5. VMC on AWS is Ending
Recent Shifts and Their Impacts
Since Broadcom’s acquisition of VMware, there have already been notable changes affecting VMware Cloud on AWS (VMC on AWS). April 2024 release notes indicate as Broadcom shifts its approach to the Broadcom portal these notable and incredibly impactful changes to customer VMC environments will go into effect:
- Identity
- No new MFA configurations can be made.
- No modifications to existing MFA configurations can be made.
- No new VMware accounts can be created.
- Commerce
- You will no longer be able to create, renew, upgrade, self-service purchase, or take any action on subscriptions from within the VMware Cloud Services portal. Read-only subscription information will be shown in relation to VMware Cloud Foundation services.
- VMware Cloud Services portal no longer integrates invoicing and statements.
- VMware Cloud Services portal no longer handles payment methods.
- VMware Cloud Services portal no longer supports the use of Promotional Credits.
May 4-5th, “VMware Cloud Services will be in maintenance mode. You will be able to perform only read operations during this time period”. Once maintenance mode is lifted, “new Broadcom subscription data related to VMware Cloud Foundation will be shown in the UI, including Serial numbers assigned.” What the future holds for VMC customers on AWS is at best tenuous. But the impact on customer trust with actions like these is material.
Looking Towards a Stable and Innovative Future with AWS Cloud Native
Why AWS?
AWS is continually accelerating the pace of innovation to deliver customer-centric innovation and technologies that customers can use to transform their business. AWS is not just a service provider. It’s a partner in innovation with the largest and most dynamic community, with millions of active customers and over 130,000 partners globally. With a broad spectrum of tools and services continuously updated and improved, AWS empowers businesses to build and scale applications with more flexibility and security than ever before. AWS’s global infrastructure and unparalleled suite of services provide the reliability that businesses need to operate confidently and efficiently.
In these times of uncertainty with VMware, making a proactive choice can set you on a path to stability and growth. Transitioning to AWS cloud native solutions not only mitigates the risks posed by the Broadcom acquisition but also positions your business at the forefront of technological advancement.
Why ClearScale?
ClearScale’s team of AWS-certified professionals have completed more than 400 successful migrations to AWS. Our extensive AWS Migration Services earned us the AWS Migration Competency. We’re ready to help you design and implement a cloud strategy that aligns with your business goals, ensuring a smooth and effective transition that produces real outcomes for your business.
Reach Out Today
Are you ready to leave uncertainty behind and embrace a clear, scalable, and innovative cloud solution? Learn more at https://www.clearscale.com/information/optimize-your-vmware-exit-strategy or https://www.clearscale.com/information/transitioning-from-vmc-to-aws-native-services.
Then, contact us today to find out how we can help you transition to a reliable, future-ready AWS environment. Let us help you turn this period of uncertainty into an opportunity for growth and stability.
